What is Public Liability Insurance? A Guide for Singapore Businesses

In the bustling business ecosystem of Singapore where SMEs make up 99% of all enterprises¹, physical interactions are still the heartbeat of commerce. However, this constant flow of people and activity brings an unavoidable risk of accidents and third-party mishaps. This is exactly where public liability insurance comes into play.

In this article, we’ll cover the fundamentals of public liability insurance in Singapore, who needs it, what it typically covers, and some of its key benefits for SMEs. While we’re discussing this important cost of doing business for SMEs, we’ll also touch on how Wise Business can help enterprises work around other commonly incurred costs like exorbitant foreign exchange markups, high international transaction fees, and the hidden costs of traditional bank transfers.

This guide is for information only, and should not be taken as advice. If you’re unsure about how to best manage your company’s insurance matters, seek support from a professional.

What is public liability insurance?

At its core, public liability insurance (often abbreviated as PLI) is a policy designed to protect your business from the financial fallout of third-party claims.

Public liability insurance covers the "third party", which includes your customers, suppliers, contractors, and even random passers-by. It serves as a financial shield, ensuring that a single lawsuit doesn't drain your company’s cash reserves.

Core areas of public liability insurance coverage in Singapore

In our local market, most standard policies focus on three primary pillars of protection:

• Bodily injury: Covers medical expenses and compensation if a third party is injured on your premises.
• Property damage: Covers repair or replacement costs if your operations damage someone else’s assets.
• Legal expenses: Even if a claim is baseless, the cost of hiring a lawyer in Singapore can be a significant drain on your company’s finances. PLI covers these legal fees and court costs.

Note: Public liability insurance covers the "public," but it does not cover your employees. In Singapore, injuries to your staff are strictly governed by the Work Injury Compensation Act (WICA), administered by the Ministry of Manpower (MOM)². This is a mandatory requirement for all manual workers and non-manual employees earning below a certain threshold.

Who needs public liability insurance?

Picture this, You’ve finally secured that dream shophouse unit in Tanjong Pagar for your new boutique fitness studio. The renovations are sleek, the marketing is humming, and the first batch of clients is flowing in. Then, during a rainy Tuesday afternoon, a delivery person slips on a small puddle near your entrance, resulting in a fractured wrist and a damaged high-end laptop.

Suddenly, you aren't just thinking about yoga mats and espresso machines; you’re thinking about legal letters and medical bills.

This is why while it is not strictly mandatory by Singapore law for every business (unlike WICA), PLI is almost always a contractual requirement enforced by statutory boards and landlords.

Here are a few examples of other business categories that often need to get PLI:

Retail and Hospitality: If you run a cafe, your landlord will likely require proof of insurance. Commercial Property guidelines also frequently stipulate that tenants maintain public liability coverage to protect against third-party risks in common areas³.

Contractors and Renovation: According to Building and Construction Authority (BCA) standards, you will typically not be allowed to commence work on a commercial project without a valid Certificate of Insurance naming the landlord as a principal⁴.

Note: Venue operators (like those at Marina Bay Sands or Suntec) typically require a related category of PLI - Event Liability Insurance - to protect against mishaps during setup and teardown.

Key insurance terms explained

Navigating the fine print of public liability insurance can feel like learning a second language. To manage your risks effectively, you need to understand the "levers" that control your coverage:

• Limit of Indemnity: This is the maximum amount the insurer will pay out for a single claim or throughout the policy period. For most Singapore SMEs, a limit of S$1,000,000 is a standard starting point, though larger contracts may require S$5,000,000 or more.
• Excess: Also known as a deductible, this is the initial amount you must pay out-of-pocket before the insurance kicks in. For example, if your excess is S$500 and a claim is settled for S$5,000, you pay S$500 and the insurer pays the remaining S$4,500.
• Exclusions: These are the "no-go" zones. Standard PLI usually excludes claims related to professional advice (which needs Professional Indemnity) or faulty products (which needs Product Liability).
• Jurisdiction: In Singapore, you should ensure your policy has "Singapore Jurisdiction," meaning it covers lawsuits filed within the local court system.

Public liability vs other business insurance

It’s easy to get lost in the "insurance alphabet soup," so here’s a quick comparison of how PLI interacts with other common Singapore business insurance policies:

How to claim public liability insurance

When an incident happens, the clock starts ticking. Prompt notification is key to a successful claim.

Here are are some tips for what to do after an incident occurs:

• Prioritise Safety: Call for medical help if needed.
• Gather Evidence: Take photos of the scene and secure CCTV footage.
• Identify Witnesses: Collect contact numbers of anyone who saw the incident.
• Maintain Professional Neutrality: Avoid making immediate assessments of fault or promising specific compensation, as this might inadvertently void your insurance coverage⁵. Instead, reassure the person that you are taking the matter seriously and will conduct a thorough internal investigation.

Once the situation is stable, notify your broker or insurer immediately. They will provide a claim form and may appoint a Loss Adjuster to investigate. The adjuster will review your evidence, interview witnesses, and determine if the business was indeed negligent.

If the claim is valid, the insurer will negotiate a settlement with the third party or defend you in court if a lawsuit is filed.

Factors affecting public liability insurance premiums

Why does one business pay SGD200 a year while another pays SGD2,000? Insurers look at four main risk factors:

• Nature of Business: A construction firm has a much higher risk profile than a digital marketing agency.
• Location: Premises with high public access (like a shopping mall) are more costly to insure than a private industrial office.
• Annual Turnover: Higher revenue often correlates with higher volume of operations, which increases the likelihood of an incident.
• Claims History: If you’ve made three claims in the last two years, expect your premiums to climb.

Wise Business: Simplify international business transactions

Managing the various costs of running a business in Singapore, from essential public liability insurance premiums to daily operational expenses, requires a sharp eye on your bottom line. While insurance protects you from unexpected third-party claims, Wise Business helps solve the problem of high fees and hidden markups often found in traditional banking.

By providing access to the mid-market exchange rate and transparent transaction fees, Wise Business helps your company retain more capital when paying international suppliers or managing cross-border insurance consultants. This ensures that while you are busy protecting your physical premises and reputation, your financial operations remain lean and cost-effective.

Wise Business serves as an alternative to traditional business account as you can hold, send, receive and exchange 40+ currencies all in one place. You’ll always get the mid-market rate with low, transparent fees. Even better, you can connect Wise Business cards to your account to control team spending in real time and reduce admin.

Here's what you get with a Wise Business account:

• Hold and manage 40+ currencies for all your international transactions.
• Pay foreign currency bills and ad-hoc business travel expenses using the Wise Business card without hefty foreign transaction fees.
• Get your first Wise Business card for free when you open a Wise Business account.
• Always get the mid-market rate with transparent conversion fees.
• Seamless integrations with popular accounting software.

➡️Get started with Wise Business today

Sources

1. Singapore's Business Entities Trends: Department of Statistics (SingStat)
2. Work Injury Compensation: MOM
3. Guide to Common Commercial Lease Terms in Singapore: Singapore Legal Advice
4. PUBLIC SECTOR STANDARD CONDITIONS OF CONTRACT FOR CONSTRUCTION WORKS 2020: BCA
5. Public Liability Policy: Etiqa
6. Professional Indemnity Insurance: Tan Insurance Brokers
7. Product Liability Insurance: Liberty Insurance Singapore
8. Loss Adjusters — Role In Insurance Claims: LawGazette.com.sg